Space For All Our Stuff
I spent more than 20 years in Research and Development at a major global food manufacturer. Our corporate leadership made it very clear that our primary obligation as an organization was to our shareholders. And the fundamental goal of the organization was to maximize shareholder value. (In fairness I should point out that our company always took responsibilities such as food safety very seriously.) But from early in my tenure I doubted that shareholder value should be the sole and central goal. It always seemed to me that the corporation had an obligation to its employees, its customers, and the communities in which it operated, and that eventually companies and society would come to recognize those broader obligations.
Is this forecast coming to pass? Turns out that while I was possibly ahead of the times I was certainly also behind them. In a recent op-ed piece in the Los Angeles Times, Cornell corporate and business law professor Lynn Stout points out that maximizing shareholder value became the corporate imperative only in the last three decades. “But for most of the 20th century, professional managers of public corporations … viewed themselves as stewards or trustees responsible for steering great social institutions — public corporations — for the benefit not only of shareholders but also employees, customers and the nation.”
Stout, who has written a book on the subject, argues not only that a focus on shareholder value is bad for other important stakeholders but also that it’s bad for the shareholders themselves, because it incentivizes short-term thinking. Managers tend to make decisions that maximize quarterly results at the expense of the long-term health of the corporation. As a staff member of the “R” part of R&D I was very familiar with this issue. My colleagues and I were constantly seeking to justify investment in long-term projects with high potential benefit but uncertain outcomes, while confronting the imperative to generate short-term business results.
What does all of this have to do with foresight? When organizations return to a stewardship point of view and seek to benefit customers, communities, employees, and shareholders, foresight can help in three important ways.
- Longer-term thinking. Stewardship of a corporation for the public good requires a longer-term approach. Foresight processes are designed for time horizons beyond the usual corporate strategic planning frame of one to three years.
- Broader thinking. Addressing the interests of a breadth of stakeholders makes it necessary to consider a wider range of driving forces shaping the future. Foresight explicitly considers a broad range of trends and drivers.
- Systems thinking. When organizations begin to consider the interests of a broad set of stakeholders they must be concerned with the way those interests interact in a complex, interconnected system. Systems thinking is an important element of foresight methods.
Of course there are a number of signs that corporations are taking a broader view of their responsibilities, including the corporate social responsibility and social entrepreneurship movements. I’m just glad I’ve been able to stick around long enough to see the tide begin to turn.
(Thanks to Shaping Tomorrow for calling the LA Times article to my attention.)
Image: David Paul Ohmer (Flickr)
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